Wal-Mart Claims Its Savings Are Permanent

You have to hand it to Wal-Mart Stores Inc. (NYSE: WMT). The giant retailer is not going to give up its pursuit of Amazon.com Inc. (NASDAQ: AMZN) for online business.

Now that the dust has settled from Amazon’s second Prime Day promotion, Wal-Mart continues to take pokes at Amazon after the online retailer reported on Wednesday that its Prime Day generated 50% more U.S. orders than last year’s promotion and was the company’s biggest day ever for Amazon device sales.

Wal-Mart is countering with its best shot: low prices all the time, every day. In a graphic released Wednesday, Wal-Mart claims that it “makes it easy for customers to save every day,” citing rollback (sale) pricing on thousands of items in the month of July, free shipping for the week ending July 15 and a month-long trial of the company’s free unlimited two-day shipping program called ShippingPass.

Without giving specific numbers Wal-Mart said it has received more than four times the number of sign-ups for ShippingPass since it announced the free trial. The true test, of course, is how many of these tire-kickers can be converted to paying subscribers. ShippingPass costs $49 a year, half the cost of Amazon Prime, but there is no monthly plan similar to Amazon’s $10.99 offer.

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Fernando Madeira, the CEO and president of Walmart.com, said:

At Walmart, we believe saving money every day is better than just one, and that all customers should save, not only some.

That formula has built Wal-Mart into the behemoth it is today, but it may have run its course. Offering a shipping program that is only available to those willing to pay for it dilutes Madeira’s claim.

On one hand, Wal-Mart seeks to be the everyday low-price leader. On the other hand, Wal-Mart is facing a period of slow or no growth, not just in the United States, but in China and India. Online sales may be the last, best hope for the retailer to post some growth.

Investors have been willing to accept Amazon’s no-dividend policy because the company’s share price has taken off in the past five years, up more than 240% compared with Wal-Mart’s gain of around 35% in the same period. Even if Wal-Mart gave up its dividend and plowed the cash back into the online business, it is hard to see the company outperforming Amazon.

Wal-Mart shares traded up 0.6% Thursday morning, at $74.11 in a 52-week range of $56.30 to $74.35.

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